The Indiana Department of Natural Resources is allowing Peabody Energy to potentially stick Indiana taxpayers with the company’s $163 million of mine reclamation costs, according to an editorial in yesterday’s Indy Star. For too long, Peabody Energy has been allowed to “self-bond” — a promise to provide future reclamation funds — instead of purchasing a surety bond or creating a trust fund to pay for the costs of cleaning up its mines, avoiding contamination and reclaiming the lands that the mining has marred. Peabody is now verging on bankruptcy. Indiana officials need to act decisively to ensure that taxpayers aren’t left holding the financial bag. Indiana and federal laws require mining companies to reclaim surface lands damaged by their operations and provide financial assurances that cleanup funds will be available. Companies often buy third-party surety bonds that act as insurance policies guaranteeing reclamation funds are available when needed. Peabody, however, uses “self-bonds” for its six coal mines in Indiana. Maybe that made sense five years ago when Peabody Energy’s stock price was about $74 and its market capitalization was billions of dollars. Peabody has since lost 99 percent of its market value and is radically restructuring its finances and selling assets to avoid bankruptcy. Peabody has essentially “maxed out its credit cards” by borrowing all remaining funds under its corporate debt agreement.
